Banking on Success? Over half of Financial Services Organizations Lack the Skills for Digital Transformation Projects

Fujitsu EMEIA

News facts:

CEOs are leading digital adoption in the financial services sector, far higher than any other industry

Three quarters of financial organizations have a strong appetite to move faster towards digital adoption

A study of more than 600 IT decision makers in Europe reveals widespread agreement that digital transformation is vital, yet highlights disconnects in terms of strategic priorities

Luxemburg, April 14, 2016
Financial business leaders in Europe agree that digital transformation is critical to their future success. However, a report1 commissioned by Fujitsu reveals that over half of those surveyed believe their organizations lack the skills to implement digital projects – with many companies failing to provide a clear strategy for reaching this goal, and the majority still seeing the whole digitalization process as a gamble.

Despite a widespread perception that the financial services industry is in the vanguard of digitalization, two in three (64 percent) state that it is difficult to know whether they are making the right choices about digital adoption. This is supported by the fact that just over half (52 percent) say that they don’t have the skills for digital transformation projects. Furthermore, three-quarters agree that the success of their digital projects is like playing roulette – slightly above the cross-industry percentage – showing that while the rewards can be high in finance, so can the risks.

The survey of more than 600 C-level executives and IT budget holders reveals a high degree of optimism regarding digital transformation, across industry sectors. In financial services, most digital decisions are driven from the top – often by the CEO, a level far higher than seen in retail, manufacturing & utilities, and the public sector. Fujitsu’s analysis is that this may be due to the fundamental importance given to value creation and promoting new revenue-generation channels through digitalization in banking and finance. Compared with other sectors most financial services respondents (43 per cent) put this as their top reason for pursuing digitalization. Yet, nearly two-thirds believe their organization would benefit from a more balanced approach to IT spend between digital transformation and day-to-day running of IT management.

Ravi Krishnamoorthi, Senior Vice President & Head of Business Applications Services, EMEIA, Fujitsu, adds: “Fujitsu’s research findings resonate with what I see everyday, working with financial services clients: That CEOs have taken charge of steering the course to digital success. Financial enterprises are turning to Fujitsu for industry knowledge support and training that adheres to industry regulations, is digitally versatile and addresses the skills gap to reduce risk, while maintaining a balance between IT systems that will ‘change the bank’ and those that ‘run the bank’.

Very soon, by enabling the plethora of digital technologies we will find ‘innovate the bank’ as a separate function as CEOs of large financial institutions undertake reform to cater to the disruptive needs of the end consumers.”

There are many pressures on banks and financial institutions that could be driving this change. Traditional physical channels, such as branches and ATMs now must evolve to coexist with digital channels which are driven by both changing consumer expectations and behavior and new and more convenient ways to manage transactions, expecially via mobile applications.

Ravi Krishnamoorthi adds: “We are helping banks adopt a different approach to IT, one that is both able to support digital initiatives – the area we call ‘Fast IT’ – alongside the very necessary steps to modernize existing systems to exploit the value locked in these systems, which we call ‘Robust IT’. Fujitsu believes that sustained competitive advantage can come only by creating a position of balance between the two. This approach optimizes existing data and processes, integrates and orchestrates Fujitsu’s own and third party cloud services, and manages these alongside on-premise IT.”

Fujitsu defines transformation as bridging the digital disconnect through the seamless integration of new front-end experiences with processes and information at the core operational level, which is fundamental to future business. Finding the right combination is unique for every organization – including banks and other financial institutions - instead of being a linear process or about doing one thing or another.

Furthermore, Fujitsu’s philosophy is that in order to be truly digital, organizations must be digitally-enabled from end-to-end, by building new digital front-end experiences and connecting these seamlessly to back-end systems and the underlying infrastructure.

Notes to editor

The “Walking the digital tightrope” report is here.1A study into the digital maturity of organizations across EMEIA was commissioned by Fujitsu and carried out by independent research company, Censuswide, in October 2015. The study covered the UK, Germany, Spain and Sweden and consisted of two parts:

A quantitative survey of 643 IT decision makers in the retail, finance, manufacturing and public sectors, examining how many companies are exploring the adoption of a two-speed IT strategy; the factors driving this adoption and the barriers to its success

A series of qualitative interviews with 16 CEOs in the same countries and sectors

Financial Services-specific findings

In a hyper-connected world, the digital success of organizations in the financial services sector can be a game of chance and IT decision makers are unsure about the outcomes of their digital choices, and concerned about the lack of in-house skills to achieve digital success

73 percent of financial sector organizations confirm that the success of their digital projects is a gamble (compared to 70 percent of all respondents)

Two-thirds (64 percent) of financial sector organizations state that it is difficult to know that they are making right choices about digital adoption

Over half (52 percent) of financial sector organizations claim that they do not have the right skills in place to successfully deliver digital projects

The financial services CEO is leading the race to faster digital adoption – driven by promises of more efficient processes and increased revenue

For 77 percent of financial sector organizations, there is an appetite to move faster towards digital adoption

For nearly a quarter (22 percent) of them, the digital agenda is most significantly driven by the CEO, a level far higher than seen in retail, public sector and manufacturing & utilities

This is perhaps fueled by the business-led benefits digital transformation can bring – for 38 percent of IT decision makers, the ‘creation of new revenue/value’ is among the top-three benefits of digitalization

When asked to highlight the top three threats to their organization of failing to digitalize fast enough, respondents selected: reduction in productivity (45 percent), increase in costs (41 percent) and decrease in overall revenue (41 percent)

For almost two-thirds (61 percent) of financial sector organizations, IT budget is split between digital transformation and day-to-day IT management – with the former taking the majority of investment

Only 13 percent state that IT budgets invested more money to cover day–to-day IT needs

Only 40 percent of organizations state their business has aligned digital priorities

‘Failure to prioritize digital projects’ is listed as one of the top-three barriers to digital success by 31 percent

62 percent of IT decision makers believe their organization would benefit from a more balanced approach to IT spend

Although perceived by many as a leading sector in digital transformation, financial services organizations are not overly confident about their digital maturity and many believe they are playing catch-up with their competitors

Less than a third (31 percent) of IT decision makers believe they are ‘extremely mature’ when it comes to digital adoption

Fewer than a third of organizations state that they are very confident (29 percent) that they have adopted the right approach to digital adoption

While almost two-thirds (62 percent) of IT decision makers agree that their organization is playing digital catch-up

About Fujitsu

Fujitsu is the leading Japanese information and communication technology (ICT) company, offering a full range of technology products, solutions, and services. Approximately 159,000 Fujitsu people support customers in more than 100 countries. We use our experience and the power of ICT to shape the future of society with our customers. Fujitsu Limited (TSE: 6702) reported consolidated revenues of 4.8 trillion yen (US$40 billion) for the fiscal year ended March 31, 2015. For more information, please see http://www.fujitsu.com.

About Fujitsu EMEIA

Fujitsu enables customers to capitalize on digital opportunities with confidence, by helping them to balance robust ICT and digital innovation. The leading information and communication technology (ICT) company can achieve this based on its full portfolio of business-technology products, solutions and services, ranging from workplace systems to data center solutions, managed services, and cloud-based software and solutions. Fujitsu’s vision is to enable a Human Centric Intelligent Society that creates value by connecting infrastructure, empowering people and creatively defining new forms of intelligence. In Europe, the Middle East, India and Africa (EMEIA), Fujitsu employs more than 29,000 people and is part of the global Fujitsu Group. For more information, please see http://www.fujitsu.com/fts/about/

All other company or product names mentioned herein are trademarks or registered trademarks of their respective owners. Information provided in this press release is accurate at time of publication and is subject to change without advance notice.